India's growing middle class and burgeoning retail and commercial
sectors, coupled with the dearth of properties, make the
country's real estate market a potentially lucrative place to
invest.

However, there is one part of the real estate market that is set
to implode — luxury and premium properties.

That's what Anuj Puri, Chairman & Country Head, of JLL India
(formerly Jones Lang LaSalle) told Business Insider on the
sidelines of the World Economic Forum in Davos, Switzerland.

"Mostly all sectors of India's real estate market are good for
investors apart from one — luxury and premium properties. A lot
of developers got it wrong and didn't realise that we don't have
many millionaires and billionaires in India so the luxury and
premium market is going to take a beating. There's too much
supply and too little demand," said Puri.

"But what we do have is a growing middle class and at the moment,
as latest data from March 2015, it shows there is a 18.3 million
dwelling unit shortfall. Affordable housing is very lucrative.
When I say 'affordable housing' I am talking about the $75,000 to
$100,000 range. There is huge demand."

JLL and its country head for India, Puri, are pretty perfectly
placed to make the call on where the Indian property market is
going. After all, JLL is one of the world’s leading and largest
real estate and investment management companies with $6.2 billion
in market capitalisation. Puri also oversees a team of over 8000+
employees across 11 cities in India.

High-rise
residential towers under construction are pictured behind an old
residential building in central Mumbai.Reuters

Puri says that affordable housing isn't the only potentially
lucrative area for property investment — retail, warehouses and
commercial real estate are all areas that are seeing demand
growth.

"Retail properties are also a great opportunity for investors as
people have better buying power," said Puri.

"There is also a lot of opportunity, which not a lot of people
have identified yet, in warehouse and logistics. In India, most
of these compaies are non-sophisticated and 'mom and pop' shops
and it doesn't seem very sexy for an investor but it could be a
great area for expansion if the 'Indirect Tax
Bill' gets through parliament."

Indirect Tax is when the Indian government collects take from an
intermediary such as a manufacturer or retailer. It's pretty
complicated but the current government led by Narendra Modi is
trying to get this changed and more streamlined by introducing a
uniformed Goods and Services Tax (GST) bill.

And Puri thinks this could be the key to opening the market up
more to foreign investment and "trust" for companies looking to
bring business to India.

"Hopefully the bill (which unifies tax rates) will go through. At
the moment, India has 29 states with 29 taxes," he said.

"As a company like Proctor and Gamble for instance, you aren't
going to set up units or warehouses in different parts of India
and worry about what taxes they have to pay in each different
state. It makes it too difficult for people to do business."